The Investment Association has published guidelines concerning the redemption or
cancellation of irredeemable preference shares. The aim of the
guidelines, which are of general application to listed companies,
is to promote market confidence in irredeemable preference shares
as an asset class and avoid reputational risk for issuers.
The guidelines require issuers to follow a fair process, and
have regard to the fair market price, when considering the
redemption of irredeemable preference shares.
Key to ensuring a fair process is consultation by an issuer with
the irredeemable preference shareholders such that they have
sufficient time and information to enable them to reach a properly
informed decision on the proposed redemption. Achieving a fair
market price is crucial.
